Economists at Rabobank expect the Euro to weaken in the coming months.
The European Commission is currently focused on improving the competitiveness of the EU. At the centre of these concerns is the stagnating German economy. If the ECB can contain inflation going forward, a weaker EUR could help support the reforms needed to boost the competitiveness of the EU.
On a 1-to-3-month view, we see the potential for EUR/USD to dip back to the 1.05 region.
On a long-term horizon, we see greater chance of EUR/USD trading in a 1.04-1.12 range, than managing a return to levels above 1.22.
Citing sources, Bloomberg News reported on Monday that Bank of Japan (BoJ) officials see little need to abandon the negative interest rate policy (NIRP) this month.
The Japanese central bank hasn’t seen enough evidence of wage growth to justify sustainable inflation, the sources added.
developing story ...
Gold prices fell in India on Monday, according to data from India's Multi Commodity Exchange (MCX).
Gold price stood at 61,379 Indian Rupees (INR) per 10 grams, down INR 817 compared with the INR 62,196 it cost on Friday.
As for futures contracts, Gold prices decreased to INR 61,575 per 10 gms from INR 61,719 per 10 gms.
Prices for Silver futures contracts decreased to INR 72,450 per kg from INR 72,518 per kg.
Major Indian city | Gold Price |
---|---|
Ahmedabad | 63,710 |
Mumbai | 63,360 |
New Delhi | 63,465 |
Chennai | 63,510 |
Kolkata | 63,535 |
(An automation tool was used in creating this post.)
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
USD/INR remains remarkably stable. Economists at Commerzbank analyze the pair’s outlook.
The Reserve Bank of India (RBI) left the benchmark repo rate unchanged at 6.50% as expected. RBI remains in a wait-and-see mode. There is no urgency to alter policy in any direction at this juncture. The economy is on track to expand by 7% in 2023.
RBI also upgraded the forecast for the current fiscal year 2023-2024 to 7% from 6.5% previously. At the same time, inflation is well-controlled, as there are no signs of uncontrolled demand-led or input-cost inflation. Headline inflation is expected to average around 5.7% this year and should hold around 5% in Q4 2023. This is within RBI’s 2-6% target range.
Lower oil prices should aid INR sentiment and help to contain import inflation. Overall, RBI will be content to see a stable INR.
FX option expiries for Dec 11 NY cut at 10:00 Eastern Time, via DTCC, can be found below.
- EUR/USD: EUR amounts
- USD/JPY: USD amounts
- USD/CHF: USD amounts
- AUD/USD: AUD amounts
USD/MXN attempts to retrace its recent losses, hovering around 17.37 during the Asian session on Monday. The US Dollar (USD) receives upward support from the market sentiment that the Federal Reserve (Fed) won't implement interest rate cuts anytime soon. This sentiment is driven by the resilience displayed in the United States (US) labor market. The US Nonfarm Payrolls for November surpassed expectations with a significant increase of 199,000, and the Unemployment Rate dropped to 3.7% from the previous 3.9%, contributing to the prevailing confidence in the USD.
The latest Headline Inflation in Mexico increased to 0.64% in November from 0.38% in October but fell short of the market expectation of 0.72%. Meanwhile, Core Inflation eased at 0.26% against the 0.30% as expected and 0.39% previously. Additionally, Banxico's upcoming announcement of its key interest rate on Thursday is a notable event that could influence market movements. The prevailing expectation is that Banxico will maintain cash rates at the unchanged level of 11.25%. Investors will likely monitor the central bank's decision and any accompanying statements for insights into the monetary policy outlook.
The Bank of Mexico's (Banxico) officials have recently expressed a leaning towards easing monetary policy. However, dissent emerges within the ranks, notably from Banxico's Deputy Governor Irene Espinosa. She has pushed back, emphasizing that inflationary risks persist and are increasing. This underscores a divergence in perspectives within Banxico regarding the appropriate stance on monetary policy.
The rise in US bond yields, driven by speculations about the Federal Reserve's (Fed) expected rates trajectory higher, is fortifying the US Dollar (USD) and providing considerable support to the Greenback. The US Dollar Index (DXY) remains robust, maintaining a position above 104.00. The yields on 2-year and 10-year US bond coupons stand at 4.75% and 4.25%, respectively, by the press time.
Moreover, Investors are poised to closely watch the US Consumer Price Index (CPI) data for November on Tuesday. Market expects a slight decline from 3.2% to 3.1% in yearly CPI data. However, monthly CPI is anticipated an increase to 0.1%.
Leaving aside the Turkish Lira, the Forint was the notable underperformer among currencies in the central and eastern European region for the past three years. Economists at Commerzbank analyze EUR/HUF outlook.
We forecast EUR/HUF to drift modestly down over the coming months because Hungarian inflation will probably moderate faster than MNB will cut rates.
But later in 2024 and 2025, wages and core inflation could prove stubborn, which will depress Hungary’s real interest rate, once more, and put EUR/HUF on a steady rising path.
Here is what you need to know on Monday, December 11:
Financial markets stay relatively quiet early Monday as investors gear up for highly-anticipated macroeconomic data releases and central bank meetings later in the week. The economic calendar will not offer any high-tier data releases. In the late American session, the outcome of the 10-year US Treasury note auction will be watched closely by participants.
The US Dollar (USD) Index snapped a three-week losing streak as the upbeat November jobs report helped the currency preserve its strength heading into the weekend. Nonfarm Payrolls (NFP) in the US rose by 199,000 and the Unemployment Rate declined to 3.7% from 3.9%, the US Bureau of Labor Statistics reported on Friday. Early Monday, the USD Index holds steady at around 104.00. Meanwhile, the benchmark 10-year US Treasury bond yield continues to fluctuate above 4.2% and US stock index futures trade modestly lower on the day.
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | -0.02% | 0.05% | -0.01% | 0.24% | 0.26% | 0.13% | -0.05% | |
EUR | 0.01% | 0.06% | 0.01% | 0.26% | 0.28% | 0.15% | -0.03% | |
GBP | -0.04% | -0.06% | -0.05% | 0.20% | 0.22% | 0.08% | -0.09% | |
CAD | 0.01% | -0.01% | 0.05% | 0.25% | 0.27% | 0.14% | -0.04% | |
AUD | -0.24% | -0.26% | -0.21% | -0.25% | 0.02% | -0.11% | -0.29% | |
JPY | -0.26% | -0.28% | -0.32% | -0.27% | -0.03% | -0.14% | -0.31% | |
NZD | -0.13% | -0.15% | -0.08% | -0.14% | 0.11% | 0.13% | -0.18% | |
CHF | 0.05% | 0.03% | 0.09% | 0.04% | 0.29% | 0.31% | 0.18% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The data from China showed that the Consumer Price Index declined by 0.5% on a monthly basis in November, bringing the annual CPI inflation rate down to -0.5% from -0.2% in October.
EUR/USD touched its lowest level in three weeks below 1.0730 on Friday and ended up closing the week in negative territory. Early Monday, the pair consolidates the previous week's losses and trades above 1.0750.
GBP/USD moves up and down in a narrow channel at around 1.2550 to start the new week. On Tuesday, the UK's Office for National Statistics will release labor market figures for October.
After fluctuating wildly in the second half of the previous week on speculations that the Bank of Japan was preparing to move out of negative rates, USD/JPY gained traction and rose above 145.00 early Monday.
Gold extended its weekly slide on Friday but managed to close slightly above $2,000. XAU/USD struggles to shake off the bearish pressure and tests that key level in the European morning on Monday.
The GBP/USD pair remains under pressure below the mid-1.2500s during the early European session on Monday. Investors are in a cautious mood ahead of the key events in the US and UK this week. The Federal Open Market Committee (FOMC) rate decision on Wednesday and the Bank of England (BoE) rate decision on Thursday will be in the spotlight this week and could trigger volatility in the market. The major pair currently trades near 1.2539, losing 0.07% on the day.
From a technical perspective, GBP/USD maintains a bearish outlook as the pair holds below the 50- and 100-hour Exponential Moving Averages (EMAs) on the four-hour chart. The prevailing bearish sentiment appears in the Relative Strength Index (RSI), which remains below 50, indicating the path of least resistance is to the downside.
The lower limit of the Bollinger Band at 1.2530 acts as an initial level for GBP/USD. The key contention level to watch is a psychological round mark and a low of December 8 at 1.2500. Any follow-through selling will see a drop to a low of November 22 at 1.2450. Finally, the additional downside filter is a low of November 17 at 1.2374.
On the upside, the immediate resistance level will emerge at the 50-hour EMA at 1.2590. The next hurdle is seen at the upper boundary of the Bollinger Band at 1.2608. A break above the latter will see a rally to a high of December 5 at 1.2652, en route to a high of December 4 at 1.2712.
The USD/CNH pair holds positive ground around 7.1960 during the Asian session on Monday. The cautious mood in the market and the weaker-than-expected Chinese data lends some support to the pair. Investors await the US inflation data due on Tuesday ahead of the Federal Open Market Committee (FOMC) rate decision on Wednesday for fresh impetus. The markets anticipate the US central bank to hold the rate steady at its December meeting.
Furthermore, the National Bureau of Statistics of China revealed on Saturday that China’s Consumer Price Index (CPI) dropped 0.5% YoY in November from October’s reading 0.2% decline. This figure came in worse than the expectation of a 0.2% decrease. Meanwhile, the nation’s Producer Price Index (PPI) fell 3.0% YoY in November versus a 2.6% decline prior, below the market consensus of a 2.8% decline in the same month.
According to the daily chart, USD/CNH holds above the 50- and 100-hour Exponential Moving Averages (EMAs), which means the path of least resistance for the pair is to the upside. The upward momentum is supported by the Relative Strength Index (RSI), which stands in bullish territory above 50. However, the overbought condition indicates that further consolidation cannot be ruled out before positioning for any near-term USD/CNH appreciation.
The immediate resistance level for USD/CNH is seen near a low of November 17 at 7.2100. Further north, the next upside barrier is located at a high of November 20 at 7.2248, en route to a low of November 15 at 7.2384, and finally a low of November 16 at 7.2427.
On the flip side, the 100-hour EMA at 7.1776 acts as an initial support level for the pair. A break below the latter will see a drop to the 50-hour EMA at 7.1662. The additional downside filter to watch is the lower limit of the Bollinger Band at 7.1503, followed by a low of November 28 at 7.1424.
USD/CHF hovers around 0.8800 during the Asian trading hours on Monday, grappling to extend its profits for the third successive session. The USD/CHF pair has been on an upward trajectory, propelled by positive employment data from the United States (US). The rise in US bond yields, driven by speculations about the Federal Reserve's (Fed) rates trajectory, is further strengthening the US Dollar (USD) and providing support to the USD/CHF pair.
The US Nonfarm Payrolls for November exceeded expectations with a substantial increase of 199,000, and the Unemployment Rate declined to 3.7% from the previous 3.9%. Additionally, the preliminary Michigan Consumer Sentiment Index for December showed a noteworthy rise, reaching 69.4, marking a significant increase from the previous reading of 61.3.
However, the consensus is that the Federal Reserve (Fed) will maintain interest rates at 5.5% during the upcoming monetary policy meeting on Wednesday. However, solid labor market conditions could put pressure on the Fed to maintain higher interest rates for a longer period. Investors are anticipated to closely scrutinize the US Consumer Price Index (CPI) data on Tuesday, anticipating potential market impacts.
On the Swiss front, the CHF experienced downward pressure following the release of seasonally adjusted Unemployment Rate data by the State Secretariat for Economic Affairs (SECO) last week. The report revealed that the total number of unemployed civilian laborers in November remained steady at 2.1%, consistent with previous figures.
Furthermore, the easing of the Swiss Consumer Price Index (YoY) for November at 1.4%, compared to the prior 1.7%, contributed to the depreciation of the Swiss Franc (CHF). The upcoming interest rate decision by the Swiss National Bank (SNB) on Thursday is expected to see the central bank maintaining policy rates at the unchanged level of 1.75%.
Gold price (XAU/USD) fell over 1.5% intraday and touched a two-week trough on Friday following the release of stronger-than-expected employment details from the United States (US). The closely-watched US jobs report showed strength across the board and pointed to a resilient economy, forcing investors to trim their bets for a 25 basis points (bps) interest rate cut by the Federal Reserve (Fed) in March 2024. This pushed the US Treasury bond yields and the US Dollar (USD) higher, which, in turn, weighed heavily on the commodity.
The selling bias around the Gold price remains unabated through the Asian session on Monday, though it lacks follow-through amid geopolitical risks. Traders also seem reluctant to place aggressive bets ahead of this week's key data and central bank event risks. The US consumer inflation figures are due on Tuesday, which will be followed by the crucial FOMC decision on Wednesday. The Swiss National Bank (SNB), the Bank of England (BoE) and the European Central Bank (ECB) are also scheduled to announce policy updates on Thursday.
The market attention will then turn to the release of flash PMI prints from the Eurozone, the UK and the US, which will offer fresh insight into the health of the global economy and provide some meaningful impetus to the Gold price. Nevertheless, the XAU/USD, for now, seems to have found acceptance below the $2,000 psychological mark and looks to a possible Fed pivot to prevent a deeper correction.
From a technical perspective, Friday's breakdown below the $2,012-2,010 area, representing the 61.8% Fibonacci retracement level of the November-December rally, could be seen as a fresh trigger for bearish traders. Moreover, oscillators on the daily chart have been losing positive traction, which, in turn, supports prospects for deeper losses. Hence, a subsequent slide towards testing the 50-day Simple Moving Average (SMA), currently pegged around the $1,965-1,963 zone, looks like a distinct possibility. This is followed by the very important 200-day SMA, near the $1,951-1,950 region, which if broken decisively will set the stage for an extension of the recent sharp pullback from an all-time high touched last Monday.
On the flip side, the $2,010-2,012 support breakpoint now seems to act as an immediate hurdle ahead of the $2,030 level and the $2,040 supply zone. Against the backdrop of the occurrence of a golden cross, with the 50-day rising above the 200-day SMA, some follow-through buying will shift the near-term bias in favor of bullish traders. The Gold price might then climb to the next relevant resistance near the $2,071-2,072 region before aiming to reclaim the $2,100 round figure.
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | 0.03% | 0.11% | 0.12% | 0.35% | 0.40% | 0.23% | 0.04% | |
EUR | -0.02% | 0.09% | 0.11% | 0.35% | 0.39% | 0.21% | 0.01% | |
GBP | -0.10% | -0.09% | 0.02% | 0.26% | 0.30% | 0.12% | -0.08% | |
CAD | -0.12% | -0.11% | -0.03% | 0.23% | 0.29% | 0.10% | -0.10% | |
AUD | -0.36% | -0.35% | -0.27% | -0.24% | 0.05% | -0.13% | -0.34% | |
JPY | -0.41% | -0.38% | -0.39% | -0.29% | -0.06% | -0.18% | -0.37% | |
NZD | -0.23% | -0.20% | -0.11% | -0.10% | 0.13% | 0.17% | -0.19% | |
CHF | -0.02% | -0.01% | 0.07% | 0.10% | 0.34% | 0.39% | 0.20% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
The EUR/USD rebounds from its three-week low at 1.0723, which was recorded on Friday. The EUR/USD pair trades higher around 1.0760 during the Asian trading hours on Monday. However, the US Dollar (USD) received an upward momentum after the release of stronger economic data from the United States (US).
The US Nonfarm Payrolls for November exceeded expectations with a significant increase to 199,000, while the US Unemployment Rate dropped to 3.7% from the previous 3.9%. Meanwhile, the German Harmonized Index of Consumer Prices (YoY) remained steady at 2.3% in November, in line with expectations, with monthly figures reflecting a 0.7% decline, similar to October.
Market anticipation suggests that the European Central Bank (ECB) will maintain the Main Refinancing Operations Rate at 4.5% in its upcoming monetary policy statement on Thursday. Furthermore, expectations point toward a commencement of interest rate cuts by the ECB in March 2024.
On the other hand, speculation surrounds the future trajectory of the US Federal Reserve's (Fed) interest rates and the duration for which policy rates will remain restrictive. However, the consensus expectation is that the Fed will keep interest rates at 5.5% during the upcoming monetary policy meeting on Wednesday.
The US Dollar Index (DXY) remains strong above 104.00, supported by positive US Treasury yields. At present, the yields on 2-year and 10-year US bond coupons stand at 4.24% and 4.73%, respectively.
Investors are expected to closely monitor the US Consumer Price Index (CPI) data on Tuesday for potential market impact. Additionally, the ZEW Survey – Economic Sentiment for December will be released by Germany, adding to the market's focus.
Indian Rupee (INR) trades flat with mild losses on Monday as traders prefer to wait on the sidelines ahead of the key US event. On Friday, the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) decided to keep the interest rate unchanged at 6.50% while raising its growth forecast for the current fiscal year to 7% from 6.5% earlier. RBI’s Das said easing inflation across all components of retail inflation is one of the reasons behind the MPC's decision to keep the repo rate unchanged.
RBI’s Das further stated that the near-term picture is clouded by risks to food inflation, which might lead to higher inflation in November and possibly December. This should be monitored for potential second-round effects.
Investors will closely monitor the US inflation data, as measured by Consumer Price Index (CPI). The attention will shift to the Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday. In the meantime, RBI could support the Indian Rupee at 83.40 as oil companies and others would buy on dips in USD/INR.
Indian Rupee trades flat on the day. The USD/INR pair has traded near the upper boundary of a trading range of 82.80–83.40 since September. According to the daily chart, USD/INR maintains its bullish vibes as it holds above the key 100-day Exponential Moving Average (EMA). Additionally, the 14-day Relative Strength Index (RSI) continues above the 50.0 threshold, bolstering the upward momentum.
That being said, a decisive break above the upper boundary of the trading range of 83.40 could pave the way to the next hurdle at the year-to-date (YTD) high of 83.47, followed by a round figure of 84.00. On the downside, the critical support level is seen at the 83.00 psychological round figure. A break below 83.00 will see a drop to 82.80, representing the confluence of the lower limit of the trading range and a low of September 12. The additional downside to watch is a low of August 11 at 82.60.
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | -0.02% | 0.07% | 0.11% | 0.31% | 0.27% | 0.09% | -0.01% | |
EUR | 0.02% | 0.09% | 0.12% | 0.31% | 0.28% | 0.10% | 0.01% | |
GBP | -0.06% | -0.08% | 0.03% | 0.22% | 0.20% | 0.02% | -0.08% | |
CAD | -0.11% | -0.12% | -0.04% | 0.19% | 0.16% | -0.01% | -0.12% | |
AUD | -0.31% | -0.33% | -0.23% | -0.19% | -0.03% | -0.20% | -0.30% | |
JPY | -0.25% | -0.27% | -0.27% | -0.15% | 0.05% | -0.16% | -0.28% | |
NZD | -0.09% | -0.11% | -0.02% | 0.02% | 0.22% | 0.18% | -0.10% | |
CHF | 0.01% | 0.00% | 0.08% | 0.12% | 0.30% | 0.27% | 0.10% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.
The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.
Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.
Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.
NZD/USD extends its losses for the second consecutive trading session, bidding around 0.6120 during the Asian hours on Monday. The robust employment data has sparked an upward movement in US bond yields, contributing to the strengthening of the US Dollar (USD) and consequently exerting pressure on the Kiwi pair.
The US Nonfarm Payrolls for November showed a significant uptick, reaching 199,000 compared to October's increase of 150,000, surpassing the market expectation of 180,000. The US Average Hourly Earnings (Year-on-Year) remained stable at 4.0%, aligning with market projections for November. Furthermore, the Unemployment Rate dropped to 3.7%, down from the previous 3.9%. Additionally, the preliminary Michigan Consumer Sentiment Index for December rose to 69.4, marking a notable increase from the previous reading of 61.3.
US Dollar Index (DXY) attempts to gain ground for another session, trading above 104.00 at the time of writing. The yields on 2-year and 10-year US bond coupons stand at 4.24% and 4.73%, respectively.
Market participants speculate regarding the future trajectory of the US Federal Reserve's (Fed) monetary policy and how long the central bank plans to maintain rates at restrictive levels. However, the consensus expectation is that the Fed will maintain interest rates at 5.5% during the upcoming monetary policy meeting on Wednesday.
Investors will closely watch the US Consumer Price Index (CPI) data on Tuesday for additional insights and its potential impact on the market. Turning attention to the Kiwi's economic agenda, the Gross Domestic Product (GDP) data for the third quarter is scheduled for release on Thursday. Projections suggest a growth of 0.2%, a decline from the previous quarter's 0.9% expansion.
West Texas Intermediate (WTI) Crude Oil prices edge higher during the Asian session on Monday and look to build on last week's modest recovery from the $69.00/barrel mark or the lowest level since June 29. The commodity currently trades just above the mid-$71.00s, up over 0.35% for the day, though lacks follow-through amid a combination of diverging forces.
The strong US Nonfarm Payrolls (NFP) data released on Friday pointed to a still resilient economy and prompted some optimism over the outlook for crude demand in the world's largest fuel consumer. This, in turn, is seen as a key factor acting as a tailwind for Crude Oil prices. Investors, however, remain sceptical that the recent production cuts announced by OPEC+ will be enough to offset rising supply from countries outside the cartel and waning global demand. This, along with weak economic data from top importer China, raises concerns over fuel demand and should cap any meaningful appreciating move for the black liquid.
In fact, China's General Administration of Customs reported on Friday that crude imports fell 10% from October to a four-month low in November. Furthermore, inflation data from China released over the weekend revealed that consumer prices last month recorded the fastest drop since November 2020. Adding to this, the Producer Price Index (PPI) marked the 14th straight month of decline. The data was seen as a reflection of weak consumer demand, warranting caution before placing aggressive bullish bets around Crude Oil prices. Traders might also prefer to wait on the sidelines ahead of this week's key central bank event risks.
Raw materials | Closed | Change, % |
---|---|---|
Silver | 22.99 | -3.38 |
Gold | 2003.926 | -1.22 |
Palladium | 945 | -2.54 |
USD/CAD recovers its recent losses as the US Dollar (USD) attempts to gain ground for the second successive day. The USD/CAD pair trades higher around 1.3600 during the Asian session on Monday. However, the stronger Crude oil prices could limit the losses of the Canadian Dollar (CAD).
West Texas Intermediate (WTI) extends its winning streak for the third successive session, trading higher near $71.60 per barrel during the Asian session on Monday. Crude oil prices experienced an upswing following the release of data last week, indicating a degree of resilience in the United States (US) economy. The robust US employment data on Friday played a significant role, portraying the labor market as one of the few positive aspects in the world's largest fuel consumer.
The US Nonfarm Payrolls for November exhibited a notable increase, reaching 199,000 compared to October's rise of 150,000 and surpassing the market expectation of 180,000. The US Average Hourly Earnings (YoY) remained constant at 4.0%, in line with the market's projections for November. The Unemployment Rate decreased to 3.7%, down from the previous 3.9%.
The robust employment data has stirred conversations regarding the future trajectory of the US Federal Reserve's (Fed) monetary policy and how long the central bank plans to maintain rates at restrictive levels. This surge in discussions has fueled an upward movement in US Treasury yields, contributing to the strengthening of the USD. Market participants are now focused on the US Consumer Price Index (CPI) on Tuesday and the Fed Interest Rate Decision on Wednesday for further insights and potential market impact.
The Japanese Yen (JPY) kicks off the new week on a softer note amid reports that Bank of Japan (BoJ) Governor Kazuo Ueda's comments last week were taken out of context and not meant to signal anything about the timing of a policy change. Adding to this, the weaker GDP report pointed to Japan's still fragile economy, suggesting that market expectations of an imminent rate hike may be overblown. In contrast, stronger monthly employment figures from the United States (USD) made traders bet that it could take the Federal Reserve (Fed) until May to begin a series of interest-rate cuts next year. This, in turn, lends some support to the US Dollar (USD) allowing the USD/JPY pair to build on Friday's goodish recovery from mid-142.00s and gain positive traction for the second successive day on Monday.
Investors, meanwhile, seem convinced that the end to BoJ's decades of super-low interest rates may be nearing. This, along with concerns about a deeper global economic downturn, might continue to benefit the JPY's relative safe-haven status and cap any meaningful appreciating move for the USD/JPY pair. Traders might also refrain from placing aggressive directional bets ahead of this week's key data/event risks. The latest US consumer inflation figures are due for release on Tuesday and will be followed by the crucial FOMC monetary policy decision on Thursday. This would play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the major. Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out.
From a technical perspective, the USD/JPY pair last week showed some resilience below the very important 200-day Simple Moving Average (SMA). The subsequent move beyond the 23.6% Fibonacci retracement level of the recent decline from the 152.00 neighbourhood, or the YTD peak, favours bullish traders. The momentum, however, paused ahead of the 38.2% Fibo. level during the Asian session on Monday, which if cleared should allow spot prices to reclaim the 146.00 mark. The momentum could get extended further, though is more likely to remain capped near the 50% Fibo. level, around the 146.80 region.
Meanwhile, oscillators on the daily chart are holding deep in the negative territory and support prospects for the emergence of some selling at higher levels. That said, the 145.00 psychological mark might now protect the immediate downside ahead of the 144.55-144.50 area, or the 50% Fibo. level and the 144.00 round figure. Failure to defend the said support levels could make the USD/JPY pair vulnerable to accelerate the slide further towards retesting sub-143.00 levels, or the 61.8% Fibo. level. This is followed by the 200-day SMA, currently around the 142.35 region, the 142.00 mark and the 141.60 region, or the multi-month low touched last Thursday. Some follow-through selling below the latter will be seen as a fresh trigger for bearish traders and pave the way for a further near-term depreciating move for the USD/JPY pair.
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the .
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | -0.07% | 0.01% | 0.05% | 0.32% | 0.31% | 0.16% | -0.09% | |
EUR | 0.07% | 0.08% | 0.12% | 0.39% | 0.38% | 0.22% | -0.02% | |
GBP | 0.00% | -0.08% | 0.05% | 0.31% | 0.31% | 0.15% | -0.10% | |
CAD | -0.04% | -0.12% | -0.05% | 0.27% | 0.27% | 0.11% | -0.14% | |
AUD | -0.32% | -0.39% | -0.32% | -0.26% | 0.00% | -0.15% | -0.41% | |
JPY | -0.30% | -0.38% | -0.38% | -0.26% | -0.01% | -0.14% | -0.40% | |
NZD | -0.17% | -0.24% | -0.16% | -0.11% | 0.15% | 0.15% | -0.26% | |
CHF | 0.07% | -0.01% | 0.07% | 0.12% | 0.38% | 0.36% | 0.23% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
The GBP/USD pair holds positive ground during the early Asian session on Monday. The pair recovers some lost ground from Friday’s low of 1.2500 and currently trades around 1.2551, gaining 0.03% on the day. The US Nonfarm Payrolls came in better than market expectations. Traders await the key events from the FOMC and BoE meeting this week and these events could trigger volatility in the market.
The Bank of England (BoE) governor Andrew Bailey said last month it was far too early to be thinking about rate cuts while warning there was “no room for complacency” on inflation despite a fall in the Consumer Price Index from 6.7% in September to 4.6% in October. The BoE is likely to keep borrowing costs at a 15-year high at its December meeting on Thursday.
The US Nonfarm Payrolls beat market expectations in November, adding 199K new jobs in the US economy from October’s print of 150K payroll additions. Furthermore, the Unemployment Rate declined to 3.7% from 3.9% while the Average hourly earnings remained unchanged at 4.0% YoY.
Last week, US Federal Reserve (Fed) Chair Jerome Powell said earlier this month that it would be premature to conclude with confidence that the Fed had achieved a sufficiently restrictive stance to tame inflation. Powell added that we are prepared to tighten policy further if it becomes appropriate to do so. Nonetheless, investors speculated that the upbeat US Nonfarm Payrolls (NFP) report may convince the Federal Reserve (Fed) to delay rate cutting in 2024.
Market players will keep an eye on the UK employment data, including Employment Change, Claimant Count Change, and ILO Unemployment Rate, due on Tuesday. Also, the US inflation data, as measured by the US Consumer Price Index (CPI) will be released later on Tuesday. The focus will shift to the US FOMC meeting on Wednesday and the BoE policy meeting on Thursday.
The Australian Dollar (AUD) seems to extend its losses on Monday. The robust employment figures in the United States (US) bolstered the Greenback on Friday, exerting downward pressure on the AUD/USD pair. Furthermore, worries about deflation in China, coupled with a Consumer Price Index (CPI) and Producer Price Index (PPI) that fell short of expectations, contributed to a selling spree on the Australian Dollar (AUD).
Australia’s chief policymaker Michele Bullock, the Governor of the Reserve Bank of Australia (RBA), is scheduled to deliver a speech on Tuesday. The RBA opted to maintain the cash rate at 4.35% at its December meeting. While the RBA maintains a tightening bias, recent economic indicators suggest a likelihood of no further rate hikes in the near future.
US Bureau of Labor Statistics (BLS) revealed on Friday that November's US Nonfarm Payrolls (NFP) exceeded market forecasts. Simultaneously, the Unemployment Rate saw a decline during the same period. Consequently, there has been an upward surge in US Treasury yields, supporting the strengthening of the USD.
The stronger employment data have ignited discussions and speculations about the forthcoming path of the US Federal Reserve's (Fed) monetary policy and the duration for which the central bank intends to uphold rates at restrictive levels. The attention will be on the US Consumer Price Index (CPI) on Tuesday and the Fed Interest Rate Decision on Wednesday.
The Australian Dollar trades lower around 0.6570 on Monday. The 21-day Exponential Moving Average (EMA) at 0.6553 could act as a key support, which is lined up with the major level at 0.6550. A break below the support region could put weight on the AUD/USD pair to navigate the area around 38.2% Fibonacci retracement at 0.6526 level. On the upside, the psychological level at 0.6600 would likely serve as a potential barrier.
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Swiss Franc.
USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
USD | -0.05% | -0.02% | 0.03% | 0.21% | 0.33% | 0.06% | -0.08% | |
EUR | 0.05% | 0.05% | 0.11% | 0.29% | 0.41% | 0.13% | 0.00% | |
GBP | 0.03% | -0.05% | 0.06% | 0.24% | 0.36% | 0.07% | -0.06% | |
CAD | -0.03% | -0.08% | -0.06% | 0.17% | 0.30% | 0.02% | -0.12% | |
AUD | -0.21% | -0.29% | -0.24% | -0.18% | 0.12% | -0.16% | -0.30% | |
JPY | -0.34% | -0.39% | -0.46% | -0.31% | -0.14% | -0.29% | -0.43% | |
NZD | -0.06% | -0.13% | -0.07% | -0.02% | 0.16% | 0.28% | -0.14% | |
CHF | 0.08% | 0.01% | 0.06% | 0.11% | 0.30% | 0.42% | 0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
One of the most significant factors for the Australian Dollar (AUD) is the level of interest rates set by the Reserve Bank of Australia (RBA). Because Australia is a resource-rich country another key driver is the price of its biggest export, Iron Ore. The health of the Chinese economy, its largest trading partner, is a factor, as well as inflation in Australia, its growth rate and Trade Balance. Market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – is also a factor, with risk-on positive for AUD.
The Reserve Bank of Australia (RBA) influences the Australian Dollar (AUD) by setting the level of interest rates that Australian banks can lend to each other. This influences the level of interest rates in the economy as a whole. The main goal of the RBA is to maintain a stable inflation rate of 2-3% by adjusting interest rates up or down. Relatively high interest rates compared to other major central banks support the AUD, and the opposite for relatively low. The RBA can also use quantitative easing and tightening to influence credit conditions, with the former AUD-negative and the latter AUD-positive.
China is Australia’s largest trading partner so the health of the Chinese economy is a major influence on the value of the Australian Dollar (AUD). When the Chinese economy is doing well it purchases more raw materials, goods and services from Australia, lifting demand for the AUD, and pushing up its value. The opposite is the case when the Chinese economy is not growing as fast as expected. Positive or negative surprises in Chinese growth data, therefore, often have a direct impact on the Australian Dollar and its pairs.
Iron Ore is Australia’s largest export, accounting for $118 billion a year according to data from 2021, with China as its primary destination. The price of Iron Ore, therefore, can be a driver of the Australian Dollar. Generally, if the price of Iron Ore rises, AUD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Iron Ore falls. Higher Iron Ore prices also tend to result in a greater likelihood of a positive Trade Balance for Australia, which is also positive of the AUD.
The Trade Balance, which is the difference between what a country earns from its exports versus what it pays for its imports, is another factor that can influence the value of the Australian Dollar. If Australia produces highly sought after exports, then its currency will gain in value purely from the surplus demand created from foreign buyers seeking to purchase its exports versus what it spends to purchase imports. Therefore, a positive net Trade Balance strengthens the AUD, with the opposite effect if the Trade Balance is negative.
On Monday, the People’s Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead at 7.1163 as compared to Friday's fix of 7.1123 and 7.1690 Reuters estimates.
Index | Change, points | Closed | Change, % |
---|---|---|---|
NIKKEI 225 | -550.45 | 32307.86 | -1.68 |
Hang Seng | -11.52 | 16334.37 | -0.07 |
KOSPI | 25.78 | 2517.85 | 1.03 |
ASX 200 | 21.6 | 7194.9 | 0.3 |
DAX | 130.23 | 16759.22 | 0.78 |
CAC 40 | 98.03 | 7526.55 | 1.32 |
Dow Jones | 130.49 | 36247.87 | 0.36 |
S&P 500 | 18.78 | 4604.37 | 0.41 |
NASDAQ Composite | 63.98 | 14403.97 | 0.45 |
Pare | Closed | Change, % |
---|---|---|
AUDUSD | 0.65774 | -0.24 |
EURJPY | 156.054 | 0.33 |
EURUSD | 1.07635 | -0.25 |
GBPJPY | 181.892 | 0.32 |
GBPUSD | 1.25452 | -0.29 |
NZDUSD | 0.61212 | -0.7 |
USDCAD | 1.35869 | -0.05 |
USDCHF | 0.87987 | 0.54 |
USDJPY | 144.989 | 0.62 |
© 2011-2023 Top Markets Solutions Ltd
This website is operated by Top Markets Solutions Ltd which is registered with the Department of Registrar of Companies and Intellectual Property of the Companies of the Republic of Cyprus as a private limited company with registration number HE272810 and is authorized by the Cyprus Securities and Exchange Commission ("CySEC") to act as a licensed Cyprus Investment Firm ("CIF") with license number 158/11. Top Markets Solutions Ltd operates in accordance with Markets in Financial Instruments Directive (MiFID).
In accordance with CySEC Circular C108, please be informed that the previous name of Top Markets Solutions Ltd was TeleTrade-DJ International Consulting Ltd.
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Top Markets Solutions Ltd ("the Company") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall the Company have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
The Company cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
The Company currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime. The Company does not provide its services to residents or nationals of the USA.
Please read our full Terms of Use.
To maximise our visitors' browsing experience, The Company uses cookies in its web services. By continuing to browse this site you agree to our use of cookies.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63.37% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade Europe strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.